No CG tax on Sanofi for Shantha deal: HC
The Indian tax authorities had asked Sanofi to pay over R650 crore as capital gains tax.
Sanofi Aventis, as it was then known, had bought out Shantha Biotechnics through acquisition of ShanH, which held a majority stake in Shantha. ShanH, the French subsidiary of Merieux Alliance, had earlier bought out Shantha in November 2008. The court held that ShanH was a company with commercial substance and so the deal was eligible for treaty protection.
The government is likely to challenge the order in the Supreme Court.
The HC ruling have positive implications for at least a couple of similar cross-border deals where the buyers face Indian tax demands, including British brewing giant SAB Miller which bought out Fosterís Group for $10.2 billion in September 2011. SAB Miller claims that the transaction enjoyed protection of the India-Australia double taxation avoidance agreement (DTAA).
Rajiv Chug, partner, direct tax, Ernst & Young said: ďAs long as the entity in the treaty-partner country has commercial substance and is
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